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  • Sophie Bernard


    (Department of Economics, University of Ottawa, Ottawa, ON)

Remanufacturing is a form of recycling where used durable goods are refurbished to a condition comparable to new products. With reduced energy and resource consumption, remanufactured goods are produced at a fraction of the original cost and with lower emissions of pollution. This paper presents a theoretical model of remanufacturing where a duopoly of original manufacturers produce a component of a final good. The component needing to be replaced creates an aftermarket. An environmental regulation assessing a minimum level of remanufacturability is also introduced. The main results indicate that a social planner could use collusion of the firms on the level of remanufacturability as a substitute for environmental regulation. However, if an environmental regulation is to be implemented, collusion should be repressed since competition supports the public intervention better. One of the results also coincides with the Porter Hypothesis.

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Paper provided by University of Ottawa, Department of Economics in its series Working Papers with number 1003E.

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Length: 28 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:ott:wpaper:1003e
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  1. Don Fullerton & Wenbo Wu, 1996. "Policies for Green Design," NBER Working Papers 5594, National Bureau of Economic Research, Inc.
  2. Chung, Chun-Jen & Wee, Hui-Ming, 2008. "Green-component life-cycle value on design and reverse manufacturing in semi-closed supply chain," International Journal of Production Economics, Elsevier, vol. 113(2), pages 528-545, June.
  3. Cellini, Roberto & Lambertini, Luca, 2009. "Dynamic R&D with spillovers: Competition vs cooperation," Journal of Economic Dynamics and Control, Elsevier, vol. 33(3), pages 568-582, March.
  4. Mitra, Supriya & Webster, Scott, 2008. "Competition in remanufacturing and the effects of government subsidies," International Journal of Production Economics, Elsevier, vol. 111(2), pages 287-298, February.
  5. Michael Waldman, 2010. "Competition, Monopoly, and Aftermarkets," Journal of Law, Economics and Organization, Oxford University Press, vol. 26(1), pages 54-91, April.
  6. Bernard Sinclair-Desgagné & Maia David, 2005. "Environmental Regulationand the Eco-Industry," Working Papers 2005.56, Fondazione Eni Enrico Mattei.
  7. Lebreton, Baptiste & Tuma, Axel, 2006. "A quantitative approach to assessing the profitability of car and truck tire remanufacturing," International Journal of Production Economics, Elsevier, vol. 104(2), pages 639-652, December.
  8. Kiesmuller, Gudrun P. & van der Laan, Erwin A., 2001. "An inventory model with dependent product demands and returns," International Journal of Production Economics, Elsevier, vol. 72(1), pages 73-87, June.
  9. Klemperer, Paul, 1995. "Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 515-39, October.
  10. Thomas Eichner & Marco Runkel, 2005. "Efficient Policies for Green Design in a Vintage Durable Good Model," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 30(3), pages 259-278, 03.
  11. Giutini, Ron & Gaudette, Kevin, 2003. "Remanufacturing: The next great opportunity for boosting US productivity," Business Horizons, Elsevier, vol. 46(6), pages 41-48.
  12. Francisco J. André & Paula González & Nicolás Porteiro, 2007. "Strategic Quality Competition and the Porter Hypothesis," Working Papers 07.03, Universidad Pablo de Olavide, Department of Economics.
  13. Heese, Hans S. & Cattani, Kyle & Ferrer, Geraldo & Gilland, Wendell & Roth, Aleda V., 2005. "Competitive advantage through take-back of used products," European Journal of Operational Research, Elsevier, vol. 164(1), pages 143-157, July.
  14. Geraldo Ferrer & Jayashankar M. Swaminathan, 2006. "Managing New and Remanufactured Products," Management Science, INFORMS, vol. 52(1), pages 15-26, January.
  15. Laurens G. Debo & L. Beril Toktay & Luk N. Van Wassenhove, 2005. "Market Segmentation and Product Technology Selection for Remanufacturable Products," Management Science, INFORMS, vol. 51(8), pages 1193-1205, August.
  16. Eichner, Thomas & Pethig, Rudiger, 2001. "Product Design and Efficient Management of Recycling and Waste Treatment," Journal of Environmental Economics and Management, Elsevier, vol. 41(1), pages 109-134, January.
  17. Canton, Joan, 2008. "Redealing the cards: How an eco-industry modifies the political economy of environmental taxes," Resource and Energy Economics, Elsevier, vol. 30(3), pages 295-315, August.
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